At what rate of compound interest per annum will a sum of Rs 2000
| At what rate of compound interest per annum will a sum of Rs 20000 become Rs 23328 in 2 years?
A. 8%
B. 16%
C. 24%
D. 12%
Please scroll down to see the correct answer and solution guide.
Right Answer is: A
SOLUTION
Let the rate be ‘R’.
Equation for final amount after adding compound interest is:
A = P × (1 + (R/100))n where P is Principal Amount, R is the rate of interest and n is the time span
⇒ 23328 = 20000 × (1 + (R/100))2
⇒ 1.1664 = (1 + (R/100))2
Taking square root
⇒ 1.08 = 1 + (R/100)
⇒ 0.08 = R/100
⇒ R = 0.08 × 100 = 8%